LatAm Electric Vehicle sales nearly double on Mexico performance

Jumping 90% year-over-year in 2018, electric vehicle (EV) sales is on the rise in Latin America and a very large part of it – nearly 50% - is accredited to the growth taking place in Mexico.

Although the Latam EV market accounted for less than 1% of global EV sales last year (far less than East Asia, Europe and North America), it is starting to grow thanks to a handful of incentives and targets, according to research from Bloomberg New Energy Finance (BNEF).

EV includes both battery electric vehicles (BEV) and plug-in hybrid electric vehicles (PHEV). Among the models available in the region or to be in showrooms by year-end 2019 are BEVs Nissan Leaf, Chevrolet Bolt, and Renault Zoe, as well as PHEVs Golf GTE, Volvo XC60, and others.

2019 Volvo XC60 hybrid (source: Shutterstock)

The Countries

While Mexico accounts for most of the uptick, Colombia and Costa Rica is also doing well. Brazil, the region's largest automobile market, is also experiencing a gradual increase but it is yet to see any significant change in the market.

In terms of sales, 1,785 units were sold in Mexico last year (excluding Tesla data), 663 in Colombia, 368 in Costa Rica, 197 in Chile, 193 in Brazil, and a total of 349 in the remaining countries of Argentina, Ecuador and Uruguay, according to a BNEF report deemed Electric Vehicle Outlook 2019.

This result is quite different when comparing to the largest automobile markets in the region, being Brazil No. 1) followed by Mexico, Argentina, Colombia, and Chile.

One factor influencing the lack of sales in Brazil, although many others exist, is the very strong presence of ethanol in the country. In 2018, at least 70% of the passenger vehicles were running on flex-fuel, giving motorist the option to use gasoline, ethanol, or a mixture of the two.

Source (BNEF)

The Incentives

In Mexico, government incentives to combat pollution in large cities such as Mexico City coupled with the sheer size of the country is why the region’s second largest automobile market is leading in EV sales.

Despite tax incentives in Brazil, the presence of ethanol along with the high price of EVs - some 190,000 reais (US$51,000) on average – is hindering growth in the country.

Meanwhile, Colombia’s ambitious target to get 600,000 EVs on its roads by 2030 is helping to push its sales and Costa Rica – one of the smallest automobile markets in Latin America – actually sold nearly double that of Brazil and this is due to several tax exemptions on EVs in the country.

The Future

Further growth in EV sales depends on several factors. Among them is the development of longer range EV batteries, the implementation of more recharging infrastructure, the offering of more EV models, and the gradual reduction in prices spurred by increased economies of scale.

BNEF expects to see price parity between EV and internal combustion engines by the mid-2020’s in most markets around the world.

Auto manufacturers, worldwide, have made commitments to electrification and are estimated to invest around US$300 billion in EVs over the next five to ten years.

While 2 million EVs were sold globally in 2018, annual passenger EV sales is expected to reach 10 million by 2025, some 28 million by 2030, and 56 million by 2040, the BNEF report says.